--- title: Do Capital Gains Count Toward IRMAA? description: If you earn a certain amount over a pre-determined threshold, you could find yourself paying an additional premium for your Medicare coverage. This is known as the Income-Related Monthly Adjusted Amount, or IRMAA. image: https://www.realized1031.com/hubfs/Images/photo/abstract/handing-money-document-IS-1194395178.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Do Capital Gains Count Toward IRMAA? Posted Jul 23, 2023 ![handing-money-document-IS-1194395178](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/handing-money-document-IS-1194395178.jpg?width=750&height=501&name=handing-money-document-IS-1194395178.jpg) You might be at a point in your life in which you’re considering applying to Medicare or are a Medicare beneficiary. Whether you are covered by original Medicare (Part A or Part B) or have a Medicare Advantage plan, government subsidies can cover the majority of your premiums.  But if you earn a certain amount over a pre-determined threshold, you could find yourself paying an additional premium for your Medicare coverage. This is known as the Income-Related Monthly Adjusted Amount, or IRMAA.   The question here is whether any [capital gains](https://www.realized1031.com/glossary/capital-gain) you earn might count toward IRMAA.  ### Explaining IRMAA  IRMAA [first came about in 2003](https://www.healthmarkets.com/resources/medicare/what-is-irmaa/#:~:text=IRMAA%20was%20first%20enacted%20in,enrollees%20in%20Medicare%20Part%20D.) as part of the Medicare Modernization Act, applying solely to Medicare Part B enrollees who had a higher income. Close to a decade later, IRMAA was expanded under the Affordable Care Act to include Medicare Part D higher-income enrollees.   The goal of expanding IRMAA was to better support Medicare’s financial stability. It also means that if you earn above a certain threshold, you’ll have to pay a larger percentage share of your Medicare coverage.   The government determines whether you are impacted by IRMAA by calculating your modified adjusted gross income from the two years prior. So if your MAGI for the tax filing year of 2021 was above:  - $97,000 as a single-return filer  - $194,000 as a joint-return filer  You will need to pay extra for Medicare coverage.  ### All About MAGI and AGI  So, what goes into your MAGI calculation? To answer this, let’s first discuss your adjusted gross income, or AGI. [According to the IRS](https://www.irs.gov/e-file-providers/definition-of-adjusted-gross-income), your adjusted gross income is defined as your entire gross income minus certain adjustments. Gross income includes the following:  - Wages/salary  - Business income  - Retirement distributions -  Dividends  - Capital gains  Meanwhile, the adjustments that lower that gross income include:  - Education expenses  - Student loan interest  - Alimony payments  - Retirement account contributions  - Self-employed insurance payments  Your AGI won’t ever be higher than your gross income – in many cases, it can be lower. And as you can see, capital gains are a part of your gross income, meaning they’re part of your AGI.  But in line with the above discussion, the government wants to know your MAGI to determine if IRMAA will impact your Medicare costs. The MAGI adds back certain deductions used to determine your AGI, which could include the following:  - Student loan interest  - One-half of the self-employment tax  - Retirement account contributions  - Tuition or fee deductions  - Foreign-earned income exclusion  - U.S. savings bonds income exclusion  - Rental losses  In many cases, your AGI and MAGI might not be too far off. But it’s important to remember that it’s your MAGI that the government will use to determine the extent of your IRMAA.  ### Can Capital Gains for IRMAA Be Reduced?  Specifically, the higher your gross income (above the above-mentioned threshold), the higher your IRMAA. Given that [capital gains are part of your MAGI](https://www.realized1031.com/blog/are-capital-gains-considered-income-for-medicare), this does impact any extra you might owe for Medicare coverage.  While Social Security (which handles Medicare and Medicaid benefits) might consider life-changing events to potentially lower IRMAA, capital gains aren’t under this category. If you’re a Medicare recipient (or are in the process of applying), be aware of your MAGI and understand that you could end up paying more for Medicare B or Medicare Advantage premiums.  This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. 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But if you earn a certain amount over a pre-determined threshold, you could find yourself paying an additional premium for your Medicare coverage. This is known as the Income-Related Monthly Adjusted Amount, or IRMAA. The question here is whether any capital gains you earn might count toward IRMAA. Explaining IRMAA IRMAA first came about in 2003 as part of the Medicare Modernization Act, applying solely to Medicare Part B enrollees who had a higher income. Close to a decade later, IRMAA was expanded under the Affordable Care Act to include Medicare Part D higher-income enrollees. The goal of expanding IRMAA was to better support Medicare’s financial stability. It also means that if you earn above a certain threshold, you’ll have to pay a larger percentage share of your Medicare coverage. The government determines whether you are impacted by IRMAA by calculating your modified adjusted gross income from the two years prior. So if your MAGI for the tax filing year of 2021 was above: $97,000 as a single-return filer $194,000 as a joint-return filer You will need to pay extra for Medicare coverage. All About MAGI and AGI So, what goes into your MAGI calculation? To answer this, let’s first discuss your adjusted gross income, or AGI. According to the IRS, your adjusted gross income is defined as your entire gross income minus certain adjustments. Gross income includes the following: Wages/salary Business income Retirement distributions Dividends Capital gains Meanwhile, the adjustments that lower that gross income include: Education expenses Student loan interest Alimony payments Retirement account contributions Self-employed insurance payments Your AGI won’t ever be higher than your gross income – in many cases, it can be lower. And as you can see, capital gains are a part of your gross income, meaning they’re part of your AGI. But in line with the above discussion, the government wants to know your MAGI to determine if IRMAA will impact your Medicare costs. The MAGI adds back certain deductions used to determine your AGI, which could include the following: Student loan interest One-half of the self-employment tax Retirement account contributions Tuition or fee deductions Foreign-earned income exclusion U.S. savings bonds income exclusion Rental losses In many cases, your AGI and MAGI might not be too far off. But it’s important to remember that it’s your MAGI that the government will use to determine the extent of your IRMAA. Can Capital Gains for IRMAA Be Reduced? Specifically, the higher your gross income (above the above-mentioned threshold), the higher your IRMAA. Given that capital gains are part of your MAGI, this does impact any extra you might owe for Medicare coverage. While Social Security (which handles Medicare and Medicaid benefits) might consider life-changing events to potentially lower IRMAA, capital gains aren’t under this category. If you’re a Medicare recipient (or are in the process of applying), be aware of your MAGI and understand that you could end up paying more for Medicare B or Medicare Advantage premiums.", "articleSection" : [ "Capital Gains" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-07-23T16:00:00+0000", "datePublished" : "2023-07-23T16:00:00+0000", "description" : "If you earn a certain amount over a pre-determined threshold, you could find yourself paying an additional premium for your Medicare coverage. This is known as the Income-Related Monthly Adjusted Amount, or IRMAA. 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